Bacterial strains isolated from diseased red pepper fruits showed inhibitory effect on mycelial growth and spore germination of Colletotrichum gloeosporioides. The bacterium was identified as Paenibacillus sp. based on its physiological, biochemical characteristics and MicroLog analysis and named Paenibacillus sp. IUB225-08. The bacterium showed the highest level of antifungal activity C. gloeosporioides when cultured at 25 oC for 60 hrs in LB broth with initial pH of 7.0. The butanol fraction from culture extract of Paenibacillus sp. IUB225-08 effectively inhibited the mycelial growth and spore germination of C. gloeosporioides than any other agricultural chemicals tested. Pepper fruits and seeds treated with spores of C. gloeosporioides showed symptoms, while those treated with the culture extract and C. gloeosporioides together did not show any symptoms. Therefore, the culture extract of Paenibacillus sp. IUB225-08 have a potential for biocontrol agent of red pepper anthracnose.